Some lenders profiting from rate cuts

Industry officials have expressed concern that some mortgage lenders may be profiting from the recent interest rate cut, as only a small percentage of lenders have promised to pass on the 0.5% cut that was announced by the Prime Minister and the Chancellor earlier this month. This has fuelled concern that many of the other lenders will end up making profit from the rate cut.

Only one quarter of lenders said that they would be passing on the full 0.5% rate cut after the recent announcement, and other have decided to pass on only a small percentage of the base rate cut. Some, including HSBC, have said that they will not be passing on the rate cut at all, leaving borrowers to pay higher interest rates. Official from the consumer group Which? have now called for a “a quid pro quo” between lenders and banks.

A Which? official said: “It’s becoming clear that we’re facing a worsening time in the housing market. As banks are receiving support from the public at large, there has to be a quid pro quo. We think in current circumstances, the consumer deserves a break.”

An industry official stated: “Some lenders have announced a reduction in their SVR and have reduced their rate by the full amount. However, a growing number have chosen not to do this and only passed on a proportion of the cut or none at all.” A spokesperson from the British Banker’s Association said: “There is scope to reduce rates to customers.”